10 Powerful Business Tax Strategies for Your Business Tax Return

Are You Using these Business Tax Strategies?

It’s no revelation that everyone wants to save money on taxes using those elusive business tax strategies. Small businesses, however, without the same protections some individuals and most large corporations enjoy- need to look carefully each year to secure new methods of minimizing their tax burdens. While the methods available to small businesses may be obscure, they could even be more numerous than those offered to different kinds of entities. There are many intriguing ways for small businesses to save on taxes that larger organizations might not have access to or would consider too minuscule to bother with pursuing.

Claiming business expenses generally lowers the profit margin for your business and only, at best, compensates the loss come tax time. But, if you are paying for business expenses out of your own pocket, then the IRS has already taken its share.

Be sure to consult with a tax professional before acting on any of the tips listed here.

1. Take Lunch Meetings

Dining with business partners or employees allows you to apply as much as 50% as a deduction. Make sure your meetings over meals are not too extravagant, though, or you could arouse the suspicion of the IRS.

2. Leverage the Section 279 Deduction

Rather than waiting for years to gradually deduct every individual piece of equipment, renovation, or material in your office- you may depreciate more than you normally would in a given year. Click here for more information on the 279 deductions.

3. Deduct Moving Expenses

Anytime you relocate over a distance greater than 50 miles from your present location, you are allowed to deduct the cost of the move. As deductions go, this is a good one since you will be paying for the cost of moving anyway.

4. Always Keep Personal and Business Accounts Separate

This helps to keep your accounting simpler. You will be less likely to make mistakes and miss valuable deductions.

5. Use Professional Accounting Software to Keep Track of Revenue and Expenses

A good accounting software suite may save time when you’re crunching numbers and making inventories. Many free options exist, which can be good to start. But you will find in time, that quality software pays for itself, and hiring your accounting out altogether can ultimately prove to the better use of your resources.

6. Select the Correct Business Structure

The way your business is legally structured will have a significant effect on the size of your year-end tax bill. This can be a bit complicated, and you may benefit most by seeking the advice of a professional.

7. Proprietors of Multiple Businesses Should Consider an Umbrella Strategy

If you have two or more enterprises, one of them can be designated as an umbrella for the others. This can allow you to offset the profits of one with the losses of the other.

8. Manage Year-End Revenues and Expenses

If you’ve had an unusually productive year, your books might not be in the right shape to keep your tax burden at a manageable level. You may compensate for this by bumping up some of the investments you planned on making next year to the current year. Just make sure you follow through with these investments when the time comes.

9. Hire an Unemployed Military Veteran

This is one of the lesser known tax credits that small businesses can take advantage of, and it’s a great way to help out our servicemen and women to reintegrate.

10. Hire Your Own Children

It’s a good way to teach them responsibility and a healthy alternative to paying them an allowance. You can also deduct their earnings.